Pandora Ads

Pandora, the online radio station that plays music based upon artists that you like, has had tremendous success with their application for the iPhone. The application has been downloaded 1.1 million times and allows the user to stream new music wherever they are.

Only problem is Pandora is set to have revenues this year of $25 million, and expect to pay out 70% of this revenue in streaming royalty rates. These rates will continue over the next few years, which will further cut into Pandora's revenue stream. We knew it would be a matter of time before Pandora found a way to monetize their success on the iPhone.

Now, Pandora will begin placing advertisements on their iPhone application. They will be small and unobtrusive and will not affect the current functionality of the application at all. The iPhone is really an advertiser's dream. The demographics of iPhone users is well known and Apple can pitch to advertisers that iPhone users on average are 36 years old, male, and have money to burn. Two advertisers have already signed up - Best Buy and Beck's Beer.

Kudos to Pandora on coming up with a way to monetize their success while still keeping the app free and allowing 1.1 million people to discover new music on their iPhones.

Stay tuned,
Erik
erikrostad.com